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Economy 'worse than a lot of people recognize,' Peterson says

Monday's gloomy economic news got gloomier when House Agriculture Committee Chairman Collin Peterson, a Minnesota Democrat who has not voted for most of President Obama's proposals to boost the economy, predicted that banks will need another $1 trillion to $2 trillion in bailouts.

"This is bad, in my opinion. It's worse than a lot of people recognize," Peterson said.

You might think that Peterson's agriculture committee would be on the sidelines in the global financial meltdown. It could be at the center of reform, depending on who among the Democratic leaders in Congress wins out in a battle over control of banking reform.

Peterson's committee oversees the Commodity Futures Trading Commission, which regulates futures trading. He argues that the credit default swaps used by unregulated investment bankers are futures contracts that should be monitored by the CFTC.

The amount of such "toxic debt" in the world is estimated at $60 trillion with about $25 trillion already identified.

"We don't know what's in the other $35 trillion, but I guarantee you it's not good news," he told Farmers Union members.

Peterson said that he recently told Vice President Joe Biden and Obama's Chief of Staff, Rahm Emmanuel, that he thinks the federal government should break up large banks so that the nation never again faces having lenders that are viewed as too big to fail.

"As a condition of all this money we're giving them, we ought to break these big outfits up," Peterson said.

Peterson said the banking industry is lobbying hard against his reform proposals, and that they seem to be winning.

On the outlook for the ethanol industry, Peterson was more optimistic, saying that he, too, expects EPA to approve a 13% blend of ethanol in unleaded gasoline. That, along with a federal renewable fuel standard that mandates more corn ethanol use each year until 2015, should benefit the industry, he said, "and we'll be in a profitable situation next year with ethanol."

Peterson's support for higher ethanol blends also got an important boosts from House Speaker Nancy Pelosi, who also spoke to Farmers Union members Monday.

Afterwards, when ask by reporters if she, too, backs higher ethanol blends, she said, "I hope so. We want to reduce our dependence on foreign oil."

Monday's gloomy economic news got gloomier when House Agriculture Committee Chairman Collin Peterson, a Minnesota Democrat who has not voted for most of President Obama's proposals to boost the economy, predicted that banks will need another $1 trillion to $2 trillion in bailouts.

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